Topps Tiles defends strategy after major shareholder criticism

Topps Tiles has defended its performance and strategy following criticism from a major shareholder, who accused the tile retailer of showing a “complete failure” after sales and profits fell in its full-year results.According to The Times, Topps Tiles’ largest shareholder, Austrian investor MS Galleon, is calling for an overhaul of the group’s senior management and strategy after what it called a series of “costly blunders” across the business.

Piotr Lipko, managing director of the Austrian investor MS Galleon, reportedly wrote to Topps Tiles’ chairman Paul Forman last week claiming that management had shown a “complete failure” to adapt to the changing retail landscape.

It comes as full-year sales fell by 5.4% to £248.5m in Topps Tiles’ full-year results, with profits halving to £6.3m, down from £12.5m the prior year. 

However, in response to the criticism, Topps Tiles said it continues to take market share despite a challenging trading environment, and is “consistently outperforming” the wider tile market.

It said that while a weaker consumer environment saw sales fall in its full-year results, this was a “substantial out-performance of an overall market which was estimated to be down 10-15%”. 

It noted that since 2019, the UK tile market is estimated to be down by around 20%, whereas its like-for-like sales have remained flat, and total revenue has increased by 14.9% through inorganic growth.

MS Galleon, which holds a 29.9% stake in Topps Tiles, meanwhile criticised the company’s acquisition of CTD Tiles, calling it “unequivocally irrational” and “highly detrimental” to the interests of the company.

However, Topps Tiles said the CTD acquisition is “strategically compelling as it is a trade-focused brand which will significantly accelerate the group’s growth in the commercial market”. 

It added there were increased trade B2B opportunities through the acquisition of CTD Tiles, and also highlighted the development of its trade digital offer, noting it has “invested significantly” in expanding its digital operations over the last five years.

Chairman Paul Forman said: “We engage with all our larger shareholders on a regular basis and listen closely to their views. Our strategy was reviewed in April and presented to shareholders in May, with further updates given last week. Further expansion of our digital capabilities is at the heart of many of these growth initiatives. 

“Our latest results show that we continue to take market share, consistently outperforming the wider tile market despite very challenging trading conditions. We believe this demonstrates the effectiveness of our strategy, which has the full support of the board.”